HC Deb 25 March 1980 vol 981 cc1377-97 12.53 am
The Minister of State, Civil Service Department (Mr. Paul Channon)

I beg to move, That the draft HMSO Trading Fund Order 1980, which was laid before this House on 29th February, be approved. I hope it will be convenient to the House if I introduce the order quite briefly and deal with any particular points that hon. Members may raise when I reply.

This is the fourth order to be moved under the Government Trading Funds Act 1973. The Act enables the responsible Minister to direct that a Crown service to which the Act applies shall be financed by a trading fund, when he considers that this will lead to improved commercial-style operation and public accountability. The introduction of such a trading fund requires the making of an order which is subject to approvel in draft by resolution of this House. There have been three such orders in the past. This order applies to Her Majesty's Stationery Office and it follows closely on the report of the Expenditure Committee in 1977, which unanimously recommended such a change.

The House will see that the services provided by the Stationery Office are briefly set out in the schedule to the draft order. They are essentially trading services, such as publishing and procurement, with a limited measure of production.

The Stationery Office is a Government Department existing to provide services to Parliament and the Government and there must be considerations other than purely commercial ones. But the Government are satisfied that it would now be right for Her Majesty's Stationery Office to move to a system of financing more appropriate to a trading service than the present system of annual Votes and appropriations. There has been some progress in this direction already by the introduction of new commercially oriented annual accounts. I hope that the establishment of the trading fund will continue this process and enable Her Majesty's Stationery Office management to operate more effectively and economically and improve accountability.

I do not think that I need to go into all the details of the trading fund unless hon. Members wish me to do so. The point really is that in future the services that the Stationery Office provides to Govern ment Departments will no longer be avail able as free, so-called allied services; they will have to be paid for by those receiving them. I think that this is a significant change that will put financial accountability for stationery and printing where it properly belongs—with those who generate the demands rather than with the agency whose task it is to satisfy them.

For the time being, stationery and printing supplied to Parliament will con tinue to be provided as an allied service and the cost of this will be financed from a Vote which the Stationery Office will administer. In due course it may be con sidered appropriate for this Vote to be transferred to the responsibility of this House and another place, but that is a matter yet to be settled; no decision has yet been taken.

Mr. Nigel Spearing (Newham, South)

Rather than leave the matter until the Minister winds up the debate, may I ask him to enlarge a little on that important sentence concerning Parliament? He said "For the time being" and then instanced the possibility of another arrangement. Can he enlarge on that a little, because it is important not only for this House but for the other place? It would be terminating an arrangement that has worked reasonably well for some time.

Mr. Channon

There is no decision to terminate the present arrangement. All I am saying is that, in the light of a decision to move to a trading fund in general, there remains the problem of what to do about Parliament. There will have to be a special Vote dealing with the printing and stationery services for this House and the other place. It may be decided in the future—it may not be, but there is that possibility—that it would be right to transfer responsibility to this House in the same way that Government Department responsibility has been transferred. No decision has been taken and clearly the views of the House would be necessary, but in principle I think that it is just as right for the House to have to face the consequences of seeing what the costs of stationery and printing are as it is for Government Departments. I can assure the hon. Gentleman that before any decision is taken we would wish to have the views of the House to see whether it thought appropriate that a change should be made. Therefore, if the hon. Gentleman has any views, I would be grateful for them tonight, or on any other appropriate occasion.

It is right in principle that services of this kind provided to Government Departments should be charged for so that Government Departments can see on what they are spending money, how much money they are spending and decide on a proper system of priorities. This principle goes far wider than the comparatively narrow issue of the Stationery Office with which we are dealing tonight, and there will be exceptions to the general rule. But the onus of proof must be on those who are against a repayment principle. I believe, and I think this is a generally shared view, that Departments should know what they are consuming, what resources they are using and what the costs are. Ministers will then be in a better position to make sensible decisions on priorities.

There is one other Vote that the Stationery Office will continue to have responsibility for and this is in respect of certain major services that are inevitably uneconomic. There is a considerable loss every year on the publishing and sale of Hansard for the House and Standing Committee debates. This is inevitable, given the overnight service that Parliament operates. There is also a long-standing arrangement, which I cannot believe the House would wish to disturb, under which public libraries have been able to buy Stationery Office publications at half price. Therefore, Vote provision is also being made available in this limited area.

The House will notice that the order is extremely short. There are four articles and a schedule. The fund will come into operation, if the House agrees, on 1st April 1980. As that is the first day of the new financial year, it is the most convenient starting date.

Article 4 sets a limit of £50 million on the amount that the trading fund may borrow from the National Loans Fund, over and above its originating debt without a further order being made. If hon. Members wish, I shall deal with the detailed accounting points. However, I suspect that they will not want me to do so. If they do, I shall answer any questions. At this late hour, I need say only that this proposal represents a step towards a proper and more commercial system of accountability for the Stationery Office. It also provides a better discipline for Government Departments. I hope that the House will join me in wishing the Stationery Office well in this venture.

Mr. Ron Leighton (Newham, North-East)

What representations has the Minister received from the employer's organisation, the British Printing Industries Federation?

Mr. Channon

I have been able to assure the British Printing Industries Federation. It is particularly worried about the tying of Government Departments and whether it should continue to use the services of the Stationery Office. Any decision about that is irrelevant to this issue. We are moving Government Departments from a system of allied services to a repayment system. That will not affect the decision. There is no need for any concern by the—

Mr. John Garrett (Norwich, South)

Does not the hon. Gentleman agree that this process permits untying? Lucrative parts of Her Majesty's Stationery Office may therefore be handed over to the private sector.

Mr. Channon

It would be possible to untie. However, the Government have made no decision to do so. Were such a decision ever to be taken, it would be considered on its merits. Any such decision will be unaffected by this order. Until any other decision is taken, Government Departments will be bound by the tying arrangements that already exist. Under this system, or the past system, it would be open to the Government to change that practice. The Government will examine that possibility. However, no decision has been taken to change the system of untying. I cannot say that the system will remain for ever. A decision would not be affected by this order. It could, in theory, have been changed, even in the past.

I hope that hon. Members will join me in wishing the Stationery Office well in its new venture. The Department will have a new status. It will be asked to adopt a new commercial approach. I hope that [Mr. Channon.] the House agrees that it is right to pass this draft order. I commend it to the House.

Mr. Spearing

Perhaps the Minister could clarify a point relating to untying. We understand that the order relates to trading funds. It is not specifically related to a possible venture of untying Government Department audits. Should that come to pass, what type of authority—it any—would be required from the House? What time scale does the Minister have in mind? Although it may not be related to this order, it is clearly related to the Government's attitude towards publicly owned services. They have made no secret of that attitude in the past.

Mr. Channon

Perhaps it will be deemed that I did not sit down. As far as I know, the Government could take a decision about untying without any reference to the House. However, I cannot believe that the issue would remain a secret. Obviously, we shall wish to examine that. We wanted to examine every Government activity. I assure the House that no decision has been taken. Any decision remains unaffected by tonight's debate. Whether it is right to tie or untie Departments from the Stationery Office will be decided on the merits of the case. I believe that if one has a centralised Department, such as the Stationery Office, Government Departments should use it; otherwise, there is little point in having it. That is a matter for Government examination. It is an important matter relating to the future of the Stationery Office and it should be examined by Ministers and officials. I shall bear the hon. Gentleman's views in mind.

1.4 am

Mr. Ian Wrigglesworth (Thornaby)

As the Minister says, this change has been envisaged for some time, and we do not seek to oppose it. Hon. Members and the public greatly appreciate the work of the Stationery Office. We use its publications all the time and are familiar with the services provided. I was in the Government bookshop in London the other day and was reminded of this debate when I saw its plethora of publications. It provides an enormous service to the public, and should be congratulated.

I enjoyed reading the first annual report of the Stationery Office produced pursuant to the change envisaged. Compared with the Appropriation Accounts and the lack of detail previously published, the move towards open government is welcome. Much more information about the activities of the Stationery Office is provided.

I was pleased to read the comment that its staff are the Office's most valuable resource. I also welcomed the comments on its various activities, including the Stationery Office's awareness of its wider social responsibilities. It mentions its policy of employing disabled people, furthering sheltered industries, recycling paper and other welcome activities, which demonstrate sensitivity to the wishes of the public and the House.

I wish to ask the Minister certain questions about the proposal. The draft order states that the debt shall be no more than £50 million. Hon. Members may also get the Stationery Office's estimated balance sheet from the Vote Office. It appears only to be half a balance sheet.

How will the net assets of £62.2 million be financed with a maximum debt of only £50 million? I assume that the insurance account, trading surplus and other items mentioned in the previous accounts in the annual report will also be taken into account in funding those assets. Will the Minister clarify the position?

There is mention in the schedule of certain subsidies. In the last sentence it says: other than such of the operations as are, or may from time to time be, the subject of subsidies". Was the Minister referring to that when he talked of subsidies for Hansard and for the use of Government publications by libraries? What are those subsidies to be?

The estimated balance sheet is a sparse document. How will it be drawn up in future, who is responsible for valuation of the assets and who will check it? Will it be left simply to the Comptroller and Auditor General or will other organisations and individuals be involved in auditing those accounts?

Mr. Spearing

Is the document my hon. Friend refers to as "sparse" the document that has come with the order? Or is he referring to the rather fuller accounts contained in the annual report?

Mr. Wrigglesworth

I am referring to the document that accompanies the order, which is much sparser than the report and accounts for last year. I would be interested to learn why that is so. Will the Minister assure the House that the details contained in the annual report will also appear in subsequent annual reports?

How will the staff be affected by the change, if they are affected at all? It would be helpful—in view of the anxiety felt by the staff and their trade unions—if the Minister could make it clear that their terms and conditions of service will not be affected by the new style of management and acccounting. It is natural that there should be anxiety and if the Minister can give some assurances they would be welcomed. I feel sure that they would calm anxieties.

As we know, the Stationery Office has suffered from industrial action. There have been industrial relations difficulties and I see from the annual report that a proposed joint industrial council is still being considered by management and the trade unions. I assume that that will be a body designed to bring all trade unions together—not just white collar workers on the one hand and industrial workers on the other—into a wider forum. I would be grateful if the Minister would say something about industrial relations in the Stationary Office and about what is proposed for the joint industrial council. The details of the proposals would be of interest because of the known disruption that has occurred in the past.

My hon. Friend the Member for Newham, South (Mr. Spearing) raised the matter of hiving off, which naturally makes the staff of the Stationery Office anxious. The Opposition are concerned that the policy of tying which has been in operation for many years should be maintained. I was encouraged by the Minister's comment that there was not much point in not using the Stationery Office. There is considerable justification for sustaining that policy to maintain the benefits of scale which have accrued as a result of the tying arrangements.

As a result of that policy the Stationery Office, to its credit, has been able to maintain a lead among the front run- ners in printing technology and print buying. I am sure that that lead has been established as a result of the substantial scale of the Stationery Office's operations and I like to think that that could be maintained and that the benefits to the Government and to the country could continue.

It would be helpful if the Minister could tell the House what proportion of Government business is handled by the Stationery Office and what proportion of stationery comes directly from the Stationery Office. What proportion of the procurement of printing and the supply of stationery come from the Stationery Office's own resources and how much comes from outside? If the Minister can give an indication that those proportions will be maintained that would reassure the Opposition and help us feel that potentially lucrative contracts would not be hived off to the detriment of the public interest and the service provided by the Stationery Office to Government Departments. I wish Her Majesty's Stationery Office well. It has the good will of the House. It is to change its style of operation. We hope that it will succeed and continue to provide high quality services and facilities to the House and the country.

1.15 am
Mr. John Garrett (Norwich, South)

I have a constituency interest. Her Majesty's Stationery Office is an important and valuable employer in Norwich. It is to be put on a trading fund basis as a consequence of the need to establish managerial and public accountability. I agree with that. I must, because it follows the Fulton committee principles established over a decade ago which I had a hand in drafting. I served on the Expenditure Committee which reported in 1977 on this and other Civil Service issues. The principle of charging out was recommended and a trading fund is one aspect of this.

The Supply procedure of Estimates, Votes and Appropriation Accounts does not establish managerial accountability adequately. The common, or allied service, arrangements which have applied to property and information services and to the services of Her Majesty's Stationery Office do not establish accountability because the Vote is carried on the user Department. Trading funds are a means of ending allied or common arrangements.

Will the arrangement be used for untying? The Minister has said that the existence of the trading fund does not predicate untying but it makes it much simpler. That does great damage to an important national and Norwich institution—Her Majesty's Stationery Office. Under such an arrangement a Department could shop around and a potential supplier could take on some of Her Majesty's Stationery Office business on the basis of a single offer or pre-sale price. Accountability and trading funds are meant to clarify, not to assist "Privatisation"—the flogging off of lumps of Government enterprise to the private sector.

Let us consider a commercial analogy. I have no doubt that the Ford motor company's foundry is a cost centre and charges the price of castings to power, train and assembly divisions. That does not mean that engines can be bought on the basis of special offers from outside companies to gain business. There is a danger of distorting a useful reform so that it causes permanent damage to Her Majesty's Stationery Office. Untying could lead to loss of output, redundancies and loss of technical skills.

The Minister does not wish to be drawn on the question. I understand why. I hope that he will state his intentions for the future of Her Majesty's Stationery Office. Will it continue to be a major supplier to the Government, or will it be sacrificed to public expenditure cuts? Is the proposal to set up a trading fund a genuine attempt to continue the progress to ending the allied service arrangements and establishing an effective control system for public expenditure? Alternatively, is it a means of handing over lucrative business to the private sector so that Her Majesty's Stationery Office is left with the unprofitable business and becomes a target for further expenditure cuts?

Are we discussing a good managerial principle being used for short term political gain? The Minister is asked to prove his machismo by cutting Government bureaucrats, civil servants and technical staff at every opportunity. He should explain his general view about the relationship of Her Majesty's Stationery Office to the Departments which it has supplied for many years.

Mr. Spearing

This is a debate and this is a debating Chamber. I make no apology for interrupting my hon. Friend. This is an important matter concerning a £250 million a year business. Before he sits down, does my hon. Friend agree that the Minister answered this point in earlier exchanges? He cannot tell us, in terms of the order. Therefore will not the matter be left open?

Mr. Garrett

I do not think that the matter will be left open. The Government have already made up their mind to seek further economies in public expenditure wherever possible, and Her Majesty's Stationery Office is a sitting target under a trading fund arrangement.

1.21 am
Mr. Nigel Spearing (Newham, South)

I am grateful for the remarks of my hon. Friend the Member for Norwich, South (Mr. Garrett). The debate has now taken a different turn from what some people imagined, even on entering the Chamber. My hon. Friend was right to draw the attention of the House to the trading fund technique which, if allied to overall accounting of a different type, allows proper management procedures to take place, to ensure efficiency within a public service. Whether we turn that public service into a revenue-raising commercial service which is required by a Government trading fund is another matter. There is a distinction between those two.

The history of the Government Trading Funds Act is unfortunate. By some act of irony, in 1973 the Bill went to a Second Reading Committee, which was summoned at very short notice. No Opposition Front Bench Members were present. Nobody knew the results of that Committee or could read about them as Hansard's printers were on strike. It was only on 23 July 1973 that a rather extended Report stage brought out the full implications of Government trading funds when applied to a range of quasi-Government services, of which Her Majesty's Stationery Office and Ordnance Survey are perhaps two of the most spectacular examples.

This debate is yet another chapter in that rather shady history. We are having a very late debate on a matter which may well be of much greater importance as time passes.

For a long time I have been a qualified admirer of Her Majesty's Stationery Office. Indeed, for some years before I came to this House I had an account, as a private citizen using my taxable income, paying £10 a year. I posted postcards and received White Papers and other matter almost by return of post. I do not know whether that admirable service is as quick now as it was then. I hope that it is. A democracy runs only on information which is complete and up to date and which can be obtained easily, quickly and in time—to use a parliamentary expression—to influence debate and discussion.

This is where something of my qualification of this organisation comes in. One of my first questions on entering the House 10 years ago was whether the Civil Service Department would open an Her Majesty's Stationery Office branch in Bridge Street for the many thousands of visitors who pass the area and the millions of Londoners who would like to obtain Her Majesty's Stationery Office publications there rather than from the rather inept and Eastern European-style Government bookshop in Holborn. That is, incidentally, difficult to find if one does not know where it is. That is the head office.

Every Civil Service Minister except the present one has received a question from me about opening up in Bridge Street. They have always said "No" to my request, and added that it was impossible to carry the whole range of publications. I replied that I did not want the whole range of publications. Let us have the things that are most attractive, particularly to visitors to London, and a range of White Papers and Hansards. We can order for collection or delivery by post the items which must be obtained from the warehouse or Holborn.

But there has been no change, no imagination, no initiative. Yet of all the printing organisations in the world Her Majesty's Stationery Office has perhaps the most magnificent range of very good publications, often produced in excellent quality and excellent print. It has a great tradition. Yet those responsible—and this is where my qualification comes in—or perhaps it is those above them, do not seem to be willing to make available the best of their production close to this House.

We must not forget, of course, that a vast proportion of Her Majesty's Stationery Office business is the supply of stationery and equipment to Government Departments and offices all over the country. Indeed, I know from the accounts that that is, in money terms, the more important part of its business, and perhaps the part which it would be easiest to transfer, because there are other people in other lines of business providing other sorts of offices with similar equipment. The Minister obviously has untying in mind, and that part of Her Majesty's Stationery Office's duties could very easily be transferred.

But, leaving that aside, the variety of publications by Her Majesty's Stationery Office is staggering. I did a check earlier today and I found that in the daily list there were no fewer than 50 ISBN publications, which works out on average at something like 250 a week, or 12,000 to 13,000 a year. Many publications are available, and rightly so, over a number of years. Recently some of the Acts of 1688 have been reprinted, and very interesting reading they are, being some of the basic Acts affecting our democracy. This means, of course, that overheads must be bigger.

If stocks are to be carried of relatively small books, the prices of which are not excessive, the storage costs and the overhead costs of sorting, recovery and despatching must be greater. These documents must be available. I am not talking about museum or scientific documents or historical manuscripts, but the official documents which Government Departments, this House, the public and all sorts of semi-official organisations require for the proper operation of our community machinery.

From what the Minister has said and as I understand the Government Trading Funds Act, it means that all this must be subsumed into some commercial venture. In many organisations an equalisation job can be done by using the profits from long prints and profitable lines to finance the others. But I would not imagine that there are many of the former in Her Majesty's Stationery Office. It publishes a selection of some of its more interesting publications. "Driving—The Department of Transport Manual" third edition, with a print of 250,000 and a price of £2.25, probably yields a modest profit, but I would not expect there to be a large number of publications with a large sale which would be sufficient to sustain the operations I have just described.

What does that mean? Leaving aside the whole question of equipment, if the publication side is to be sustained on a commercial basis—and I understand that is what this order is about—it can mean only that the standard of service will fall or the prices will go up. I suspect that both will happen. I think that would be to the public disadvantage. The Government may say—and if so I hope the Minister will confirm it when he winds up—that that is part of their policy. They do not wish to appropriate funds to Her Majesty's Stationery Office through the Appropriations Act and the Consolidated Fund, other than, perhaps, for Hansard or the services required by the House where there is a subvention either direct to Her Majesty's Stationery Office or through the House. With the exception of matters of that sort it appears that the Government have no intention of sustaining this public service and I have suggested two consequences that must follow from it.

I also noticed in the annual accounts the interesting surplus, which is much greater than it was a few years ago when the Government Trading Funds Bill was introduced. The appropriation quoted in the debates at that time for Her Majesty's Stationery Office was quite substantial, about £30 million on a £57 million sales figure with a turnover of £88 million. There is now a turnover of £250 million and a small trading surplus, and the Government are charging £3 million interest on that.

The plant and equipment—much of it of a large capacity—built up by Her Majesty's Stationery Office, no doubt on a freehold interest, is valued at current value or possibly at updated cost. But that £3 million is being taken out of interest in a notional way whereas, as I have outlined, the operations of Her Majesty's Stationery Office cannot really be commercial. I wonder why that has been done. Even if it was taken out in a commercial style, why cannot it be repaid to cover some of the natural costs and overheads I have outlined?

I hope that the publication of the interesting annual report referred to by my hon. Friend the Member for Thornaby (Mr. Wrigglesworth) will be continued, together with the suggestions mad by the Public Accounts Committee, even without the change to a trading services account. In the conclusion to the preface of the report of the Controller, Mr. Thimont, says: I referred in paragraph 3 above to the decision by the present Government that, subject to the approval of Parliament, Her Majesty's Stationery Office should move to a trading fund system of financing on 1 April 1980. This will mark the end of the allied service basis of operation which has continued for a century and a half. It means that from 1980–81 onwards Her Majesty's Stationery Office will finance its operations entirely from the income it gets by selling its goods and services to its customers and there will be no Vote for Stationery and Printing. The final sentence is almost the ultimate in Civil Service diplomacy: This offers new challenges and new opportunities for Her Majesty's Stationery Office in a commercial style environment. I make no comment on that. It says almost everything, allied to what I believe to be a general overall account of the non-commercial services for non-commercial people with which Her Majesty's Stationery Office is primarily concerned. That is why I share the concern of my hon. Friend the Member for Norwich. South. I am sorry that my hon. Friend the Member for Thornaby did not indicate the concern felt by other hon. Members. Perhaps I am being unfair, because I did not communicate it to him, but he should have discerned it almost from first principles.

The order is perhaps of greater interest than people would think. In the words of the Controller, it means the end of a century and a half of operations by Her Majesty's Stationery Office on the present basis. That by itself is an important decision. Secondly, it ushers in the new style of commercial operations, with the probable consequence that I have indicated. Thirdly, it was indicated only during the course of the debate, although no doubt experts could have predicted that it would happen, that there is a possibility, without any further consideration by the House, that a proportion of the services of Her Majesty's Stationery Office —printing, but more likely equipment—will be put up for tender.

The challenge is similar to the challenge that confronts some direct labour organisations or some of the quasi-commercial operations of publicly owned services. That raises a whole range of issues which it would not be in order to discuss tonight. However, if we cannot discuss them tonight, in view of what the Minister said earlier, I do not see how they can be discussed de jure by the House unless the subject is raised by a Member in private Members' time.

I am loth, without further consideration, to agree the order at this stage. There should have been greater consideration of its implications. I am not sure that any hon. Member would be justified in approving such an order—in view of the prospects of hiving off or of changing the nature of Her Majesty's Stationery Office that lie ahead without the Government's intentions being made clear in this respect. Knowing the intentions of the Government in respect of public service manpower, and in respect of the role of centralised services to the community, we have every expectation that hiving off is in their mind.

Until I have heard the Minister's reply, I wish to reserve my position on the order.

1.38 am
Mr. Michael Morris (Northampton, South)

The hon. Member for Newham, South (Mr. Spearing) made the point that this debate should be of interest to many hon. Members, although that is not reflected by the attendance in the Chamber.

There is unanimity about the approach to the changeover to the trading fund order, but Labour Members are not prepared to face the consequences of that unanimity. They seem to be saying that it is fine and dandy to establish an operation such as Her Majesty's Stationery Office on a proper financially attributable basis, but if there are deficiences and weaknesses, they should be denied.

The service that my constituents receive from Her Majesty's Stationery Office leaves much to be desired. The lawyers in Northampton have difficulty in obtaining publications through Her Majesty's Stationery Office in sufficient time to enable them to carry out their tasks and on many occasions they send junior clerks to London by train to collect publications from the London offices of Her Majesty's Stationery Office—mainly the Holborn branch.

I hope that we shall examine the opportunities that this new method of accounting will bring. The publications side is unexploited. Whether it should be exploited by Her Majesty's Stationery Office or hived off is another matter. When I am reminded of the equipment provision of Her Majesty's Stationery Office, I can think of no service that should be hived off more quickly. It should certainly be put out to tender. If Her Majesty's Stationery Office makes the most successful tender, good luck to it. If it does not, tough luck. That side of it should be wound up. I look forward to hearing what my hon. Friend the Minister has to say.

1.40 am
Mr. Channon

I shall try to answer all the arguments and questions that have arisen during the debate. If I omit to answer any tonight, I shall try to answer them at a later date. I shall, of course, study carefully the report of the debate.

I was sorry to hear from my hon. Friend the Member for Northampton, South (Mr. Morris) about the problem in his area. If he cares to give me the details, I shall ascertain whether there is anything that can be done to assist those who are faced with the problem that he has described.

I am grateful to the hon. Member for Thornaby (Mr. Wrigglesworth) and to others who have contributed to the debate for their tribute in general to the work of Her Majesty's Stationery Office, which has an international reputation. That is a reputation that is generally well recognised. We may have to face certain difficulties, but I am not sure that we all realise the extent of Her Majesty's Stationery Office's international reputation in so many respects.

I am sorry that Labour Members are so suspicious about the order. All that I am doing is implementing a unanimous recommendation of the ninth report of the Expenditure Committee in 1977. As I understand it, it was signed by hon. Members in all parts of the House, including the hon. Member for Norwich. South (Mr. Garrett). However, it seems to be represented by some Labour Members as a sinister Tory plot to do wicked things to the Stationery Office. I wish that Labour Members would not vote for recommendations of the Expenditure Committee if they do not want them implemented.

The main issue raised by Labour Members is that of tying. Even that is not new. The hon. Member for Norwich, South referred to it during the debates on the Expenditure Committee report in 1977. It is not a magical new issue that was thought of at the last moment. The Expenditure Committee divided and decided by 10 votes to five to remove the sentence that provided that Departments—like nationalised industries—should be free to determine whether they should use the Stationery Office. There was a genuine division of opinion within the Expenditure Committee at that time. I have referred to the Division list and at least one Labour Member took the minority view. It is not exactly a new topic.

The Government wil consider tying on its merits. We shall study it. The issue has no relevance to the debate. If the Government wanted to untie, they could do so irrespective of whether the order is accepted by the House. We are merely producing what might be described as a trading fund. The Government could easily take other steps to untie the Stationery Office without turning it into a trading fund. It is for the Government to decide whether to untie. We shall do so when we have considered all the evidence, which we shall study with the greatest care. However, tying is irrelevant to the debate. Hon. Members may vote for or against the order and sleep easy in their beds without thinking that they have taken a decision on tying.

Mr. Spearing

I recognise that the two issues can be separated in debate. However, does the hon. Gentleman agree that the situation would be different if the order had not come before the House, Her Majesty's Stationery Office was continuing in its present form and untying took place within that framework? Does he agree that untying within the framework of a trading fund produces a different situation?

Mr. Channon

That is possible. However, it is easy to untie without producing a trading fund. All that we have to do is produce a repayment without making a trading fund. The Government could untie without producing a trading fund. To untie may be right or may be wrong, and I do not wish to pre-judge that issue. That is a something which we shall study with care. I shall take note of the views of hon. Members. However, that is not a relevant consideration.

I was asked about the balance sheet, the £50 million debt and the elaborate accounting arrangements that take place as a result of the change. The £50 million borrowing power is arrived at because of the need for working capital. The Stationery Office will not be able to bring forward to the trading fund any cash balances from 1 April. It will, therefore, need to borrow immediately to pay its staff and contractors. In the early months there will be a large amount of borrowing. That will settle down to a permanent level. It is estimated that that will be about £14 million as the cash flow is established.

There may be another need during the next few years to finance an increase in stocks, a temporary interruption in income, or for some other purpose. That is why the £50 million borrowing power is included in the order. There is an extensive programme to modernise premises and plant. A large investment of about £30 million is required and there may be a need to borrow in the early stages.

The need for subsidised publishing arises for the House Hansard and Standing Committee reports. Their overnight production is extremely expensive. The cost cannot be recovered from the sale of the items concerned. HMSO received a payment of about £4 million in respect of expected losses on Hansard in 1980–81. There is also a subsidy for the sale of Government publications to public libraries at a 50 per cent. discount, involving about £500,000. That has been the case for about 100 years, and it would be a pity if the House were to decide that that was no longer acceptable.

Mr. Wrigglesworth

I thought that the Minister was about to explain the balance sheet. He gave the figures for working capital, and I can well understand that. I asked about the fixed assets and how they would be financed. The Minister did not deal with that subject.

Mr. Channon

The fixed assets have been valued in the way that is explained in the balance sheet. They have been transferred at a valuation that we think is as realistic as possible. Their value is related to the cost of replacing the assets. It is not a historic cost. It has been carried out on the basis of current market values and normal modern terms. If I have not answered the hon. Gentleman's question in full, I shall consider the matter in the light of the debate and write to him further. It is a technical matter that I should like to get right before I reply to him in detail.

I was asked about the financial objectives to be met by Her Majesty's Stationery Office. It will have to cover its outgoings chargeable to the revenue account, any additional depreciation on the difference between book value and the replacement cost of assets and on the cost of sales and monetary working capital adjustments. It will have to find 5 per cent. of the average net value of assets at current values. From that 5 per cent. the fund will have to pay the interest on its long term borrowing. It is a complicated matter, and if hon. Members wish to question me further I shall be delighted to try to give further information.

The staff will remain civil servants. There is no question of any change as a result of the order.

The JIC is a body designed to bring together the industrial trade unions. The non-industrial unions are covered already by the existing Whitley system. Discussion on the JIC continues, but to date no agreement has been reached. I should be delighted to see those discussions taken further and brought to a satisfactory conclusion.

About one-third of printing is produced in Her Majesty's Stationery Office presses, and about two-thirds is produced by the trade. I am told that the proportion has not changed by any substantial degree for many years.

The hon. Member for Newham, South (Mr. Spearing) raised a number of questions, especially about a shop in Bridge Street. I do not think that we lack imagination or initiative. If the hon. Gentleman can convince me that such a shop will pay, we shall start one. If he cannot do that, we will not start one. If we do so I may make the hon. Gentleman the manager and make him totally responsible for any losses. It is purely a question of whether such a shop would be profitable. If it can be shown that it could be profitable, we would consider the matter seriously.

Mr. Michael Morris

Will my hon. Friend also consider the possibility of offering the shop on an agency basis to discover whether that would be viable?

Mr. Channon

I shall consider any suggestions on the matter. I am told that it has been considered, but was not thought to be a profitable proposition.

Mr. Wrigglesworth

I am sorry to interrupt the Minister again. There was a Department of the Environment shop, which was a very attractive feature in Parliament Street. I do not know whether it is still there. That is an equally good position for tourists and others. It was a very small shop.

Mr. Channon

There was a brief moment, years ago, when I was responsible for that shop. I well remember it. I am reluctant to say tonight, without notice, whether it was a great commercial success. My recollection, for what it was worth—I am probably wrong—is that it was not. That makes me all the more suspicious about whether it is wise to have a Stationery Office shop there. I will check whether I am right about that point. Certainly I remember being very suspicious as to whether it was a wise idea. I was not the only one to take that view at that time.

There are a number of other points. I think that hon. Members have raised much the same points again. There is the question of privatising. All these other allegations have been made. All these matters should be considered by the Government. It must be right to consider whether Departments should be tied to the Stationery Office. That is a very important matter which should be settled on its merits. The Government will examine that on its merits. However, that is not a relevant issue tonight. If it ever were to be changed, that is obviously a matter the House would become aware of and hon. Members would have their opportunities to debate it, if that is what they wanted, in the same way as they can debate anything else.

Tonight I am merely asking the House to allow the Stationery Office to become a trading fund in the same way as there have been three other trading funds in the past. It was recommended unanimously by the Expenditure Committee. Even the hon. Member for Norwich, South supported it. I ask him to support it tonight with his vote and his voice. In fact, we brought it forward because we knew that he suggested it. If he had been against it, we should not have brought it forward in the first place. We knew the hon. Gentleman would not have suggested it if he had not been thoroughly convinced that the trading fund was in the interests of the Stationery Office and of his many constituents who work in it. To meet his request and that of hon. Members in all parts of the House, we have for once—it is very rare that a Government actually do it—met unanimously and in full the recommendations of a report of the Expenditure Committee.

Therefore, I hope that we shall get at least six marks out of 10 and that the House will allow us to form this trading fund so that the Stationery Office can operate in a commercial environment as from 1 April of this year. I hope that, if that is allowed, the House will wish it well and that it will be a great success.

Question put and agreed to.

Resolved, That the draft HMSO Trading Fund Order 1980, which was laid before this House on 29th February, be approved.